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2019 (12) TMI 158

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..... s 100 and 101 of the Customs Act shows that if the proper officer or the empowered officer has reasons to believe that a person to whom the provision applies has secreted about his person any goods or documents liable for confiscation, a search may be conducted and pursuant thereto the subsequent actions be taken which may result in arrest, seizure or confiscation. From the provisions of Section 67 of the AGST Act and 100 and 101 of the Customs Act, a process for search, seizure, confiscation etc for violating any of the provisions of the AGST Act or the Customs Act can only be initiated upon having reasons to believe by the proper or appropriate officer that a person concerned was involved in violation of any of the provisions of the GST Acts or the Customs Act. In the instant case, the documents made available on record so far as it relates to violation of the provisions of the AGST Act are not being relied upon by the respondents to indicate any such violation of the provisions of the AGST Act. What is contended is that some such documents are either fraudulent or it contains forged signatures resulting in offences under Sections 120(B)/420/467/471 of the IPC - we are of the vie .....

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..... o.2 and 3 as well as Mr. S.C Keyal, learned ASGI for the Customs Department. 2. Considering the conclusion of the learned Single Judge in the judgment and order dated 25.10.2109 in WP(C)No.7081/201 and the other connected writ petitions that the investigation revealed the commission of the principal offences under the Customs Act of 1962 (in short Customs Act) and the consequential direction to hand over the investigation to the customs authorities, along with the seized goods and trucks for further investigation, we required the presence of the authorities under the Customs Department to respond in this writ appeal. Accordingly, Mr. Sujithkumar P. Sompur, Joint Director, DRI Guwahati Zonal Unit and Mr. SC Keyal, learned ASGI representing the Customs Department are present and heard. 3. As all the appeals are based on a common set of facts, involving the same question of law, and more so considering the aspect that the learned Single Judge also passed a common judgment and order in the writ petitions, all the appeals are being heard and given a final consideration together. 4. On 21.08.2019, the police officials of the Jalukbari Police Station upon receiving certain information tha .....

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..... , having reason to believe that tax input credit has been claimed in excess of the entitlement under the Act or there has been an evasion of tax payable under the Act. Accordingly, it was the contention that the search and seizure made by the police officials of the Jalukbari Police Station and then go ahead with the investigation and thereafter lodge an ejahar alleging evasion of GST dues, would be an aberration of the established procedure of law. 8. In the affidavit-in-opposition filed by the police authorities in the writ petition, a reference was made to the letter No.DRI F.No.103/DRI/GZU/Enq/Betel Nuts/2019/1368 dated 09.09.19 from the Joint Director, Directorate of Revenue Intelligence, Guwahati Zonal Unit wherein it was stated that the betel nuts which were seized were obtained from the suppliers in the markets at Champhai and Khawzawl areas in Mizoram and they have been brought across the border of Myanmar inasmuch as, there is no production of betel nuts in the entire district of Champhai. References were made that on earlier occasions also other persons have been implicated by the DRI in cases of smuggling of betel nuts in Myanmar under the Customs Act. In the communicat .....

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..... urpose, no detention and seizure of the trucks containing the areca nuts could have been made. In response thereof, it was the contention of the police authorities that under Section 4(2) of the CrPC, the police authorities can investigate any offence, including an offence under the GST Act. Further, an ejahar had also been lodged before the Jalukbari police station alleging that fraud and forgery could be detected in the tax documents submitted by the appellants and hence, over and above it would also be an offence under Sections 120(B)/420/467/471 of the IPC. It being so, a seizure is permissible under the law under Section 102(1) of the CrPC. Further, as communicated by the authorities under the DRI, there are also allegation of violations under the Customs Act and it also being an offence, the same would be within the purview of the investigation initiated by the police authorities. The ejahar dated 03.09.2019 had been registered as Jalukbari PS Case No.1362/2019. Per-contra, it was the contention of the appellants that Section 4(2) of the CrPC cannot be invoked in respect of an offence under the GST Act or the Customs Act inasmuch as, the provisions of the two Acts are self-co .....

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..... no case for interference was made out for acceding to the prayer in the writ petitions for a declaration that the detention of the trucks containing the areca nuts was illegal and unsustainable. 14. Being aggrieved, the intra-court appeals have been preferred. 15. The core contention of Dr. Ashok Saraf, learned senior counsel for the appellants is that Section 67 of the GST Acts provides for the power of inspection, search and seizure for any claim for input tax credit in excess of the entitlements under the Act or for any contravention of the provisions of the Act or the Rules made thereunder to evade tax. In view of such specific provision for inspection, search and seizure and the further provisions in the Acts itself providing for the procedure to be followed by the authorities under the GST Act, the refusal of the learned Single Judge in the judgment dated 25.10.2019 to declare the detention and seizure to be illegal, in respect of the offences under the GST Acts would be unsustainable. 16. Similarly, for the alleged violation of the provisions under the Customs Act, Section 100 provides for the power to search the suspected persons and Section 110 provides for the power of se .....

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..... ch goods, the proper officer, or any officer authorized by him, may serve on the owner or the custodian of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer: Provided further that the documents or books or things so seized shall be retained by such officer only for so long as may be necessary for their examination and for any inquiry or proceedings under this Act. (3) The documents, books or things referred to in sub-section (2) or any other documents, books or things produced by a taxable person or any other person, which have not been relied upon for the issue of notice under this Act or the rules made thereunder, shall be returned to such person within a period not exceeding thirty days of the issue of the said notice. (4) The officer authorised under sub-section (2) shall have the power to seal or break open the door of any premises or to break open any almirah, electronic devices, box, receptacle in which any goods, accounts, registers or documents of the person are suspected to be concealed, where access to such premises, almirah, electronic devices, box or receptacle is denied. (5) The .....

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..... shall retain the same for so long as may be necessary in connection with any proceedings under this Act or the rules made thereunder for prosecution. (12) The Commissioner or an officer authorised by him may cause purchase of any goods or services or both by any person authorised by him from the business premises of any taxable person, to check the issue of tax invoices or bills of supply by such taxable person, and on return of goods so purchased by such officer, such taxable person or any person in charge of the business premises shall refund the amount so paid towards the goods after cancelling any tax invoice or bill of supply issued earlier. 20. A reading of Section 67(1) shows that where the proper officer not below the rank of Joint Commissioner has reasons to believe that there is any violation or evasion of tax under the GST Acts, he may authorize in writing any other officer of the department to inspect any of the places of business of the taxable person. Under Section 67(2) where the proper officer either pursuant to an inspection carried out under Section 67(1) or otherwise has reasons to believe that any goods liable to confiscation or any documents or books or things, .....

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..... has reasons to believe that any person has secreted about his person any of the goods or documents liable for confiscation, such officer may search that person. Upon such search, the person concerned may be arrested under Section 104 and the goods, documents, things etc may be seized under Section 110 of the Act or confiscated under Section 111. 23. A reading of Sections 100 and 101 of the Customs Act shows that if the proper officer or the empowered officer has reasons to believe that a person to whom the provision applies has secreted about his person any goods or documents liable for confiscation, a search may be conducted and pursuant thereto the subsequent actions be taken which may result in arrest, seizure or confiscation. Provisions of Section 100 and 101 of the Customs Act also contains a clear provision that prior to any search, arrest, seizure or confiscation, the proper officer or the empowered officer is required to have a reason to believe that the person concerned was involved in violation of any of the provisions of the Customs Act, and only upon the existence of such reasons to believe, the process for search, arrest, seizure or confiscation can be undertaken. 24. .....

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..... ribed under Section 102(3), i.e. to forthwith submit a report of the seizure to the Magistrate having jurisdiction over the matter. Without such procedure being undertaken, any detention of the trucks containing the areca nuts and their resultant seizure would have to be said to be without authority and jurisdiction. In the event the seizures are being followed up with submission of reports to the Magistrate having jurisdiction, it would be subjected to the procedures under the CrPC, including that of Section 451. 29. We have also taken note of the report of the Ministry of Agriculture and Farmers Welfare, Government of India dated 20.11.2019 which provides that Since phytosanitary risk is involved the sample is rejected and further consignment may be destructed or deported , in respect of the samples of the areca nuts that were taken from the seized trucks containing such areca nuts. 30. By taking note of the report of the Ministry of Agriculture and Farmers Welfare, Government of India as regards the bio-security aspects of the areca nuts and also the stand of the Customs department that the areca nuts may have been smuggled in from across the Myanmar border in violation of the p .....

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